So far the crowd funding campaign has raised $275,000 and still had 17 days to go.
PayPal has frozen the crowd funding account of Switzerland-based start up mail service, ProtonMail, saying that it requires 'further review'.
ProtonMail, a finalist in this year's MassChallenge start-up accelerator was raising funds for its end to end encryption service through Indiegogo.
ProtonMail said in a blogpost: "At this time, it is not possible for ProtonMail to receive or send funds through PayPal. No attempt was made by PayPal to contact us before freezing our account, and no notice was given.
"When we pressed the PayPal representative on the phone for further details, he questioned whether ProtonMail is legal and if we have government approval to encrypt emails," ProtonMail added in a statement.
"The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures...."
ProtonMail had started its fundraising campaign on June 17 for a new email service developed by a team of scientists working at the European Center for Nuclear Research (CERN) in Geneva, Switzerland.
It targeted to initially raise $100,000 to buy and host the servers for the mail service, which was to be increased for the expansion of service. This included mobile app, encrypted chat and encrypted file storage service.
ProtonMail promised to offer new web technologies and cryptographic algorithms to ensure the protection of user privacy by encrypting the messages before they reach the servers.
So far the crowd funding campaign has raised $275,000 and still 17 days to go for completion of the campaign.
ProtonMail however said the campaign continues and payment can be made through credit card and Bitcoins.